The filmmaker announced the addition of Sethi on Tuesday (15Jul14) after completing a worldwide search to find the perfect actor to play the boy who was raised by wolves.
The role will mark the 10 year old's acting debut.
Favreau says, "Casting is the most important element of any film and finding the right kid to play Mowgli was imperative.
"Neel has tremendous talent and charisma. There is a lot riding on his little shoulders and I'm confident he can handle it."
The child star will be the only actor featured onscreen in the film, while Sir Ben Kingsley, Scarlett Johansson, Lupita Nyong'o and Idris Elba will lend their voices to animated animal characters.
Favreau's The Jungle Book, which is scheduled for release in October, 2015, is not the only adaptation of the Rudyard Kipling tale in the works - British actor-turned-director Andy Serkis has taken charge of another live-action take on the classic children's tale with Warner Bros. studio executives.